20 Indian firms among world's top 100 in outsourcing

According to Silicon India:

Reflecting strong growth of the Indian industry, 20 Indian firms have successfully made it to the list of top 100 outsourcing companies in the world.

The latest '2008 Global Outsourcing 100', compiled by the International Association of Outsourcing Professionals (IAOP) that features 20 Indian firms has five of them - Infosys (ranked 3), TCS (6), Wipro (7), Genpact (9) and Tech Mahindra (10) among the top 10. All five are leading software service providers.


In the list, Accenture is on the top slot and IBM comes second. Companies on the list averaged $1.7 billion in annual sales and engaged 27,000 employees across the world.

Other Indian companies in the list are HCL Technology (11) Mastek (16), WNS Global Services (19), Hexaware (22), ExlService (26), 24/7 Customer (28), Cambridge (36), ITC Infotech (40), KPIT Cummins (42), Patni (46), Zensar (53), MindTree (54), Mphasis (56), Aditya Birla Minacs (62), FirstSource Solutions (73) and VCustomer (84).

According to IAOP, the key strength of Wipro and TCS is their 'employee management' while 'executive leadership' is cited as the strong point of Infosys and Genpact.

On the other hand, 'outsourcing experience' is attributed as the main strength of Tech Mahindra and HCL Technologies. The power balance in the outsourcing industry is shifting. Global competition in outsourcing is intensifying and that was reflected in this years ranking with companies from 19 countries vying for recognition, IAOP's Managing Director, thought leadership and who head the judges panel, Jagdish Dalal said.

In last year's list, there were five Indian firms in the top 10 - Wipro, Infosys, Genpact, Tech Mahindra and Cambridge.

Profile of Tata Companies - An analysis

Excerpts sourced from Economic Times and TNN


TATA MOTORS

Competencies & Opportunities: Tata Motors has some new offerings on the block. This includes the 200-500 horse power ‘World Truck’ for the global market. It has also taken a huge stride to grow inorganically by acquiring the business of Ford under the brands, Jaguar and Land Rover. New models such as Sumo Grande and the Rs 1-lakh Nano car are likely to give a fillip to the domestic business.

Challenges: Higher interest rate may dampen the demand for cars. Rising cost of key raw materials such as steel and aluminium will put pressure on margins. Turning around of the Jaguar Land Rover business into a higher profitable business is a major challenge. Positioning of the Tata brand over such a wide variety of vehicles segments starting from the cheapest Tata Nano to the luxury brands like Jaguar will not be easy.


TATA STEEL

Competencies & Opportunities: The Corus acquisition will give Tata Steel the access to global markets and higher volumes. The strong outlook for global as well as domestic steel sector will improve sales realisation. Acquisition of iron ore and coking coal mines in different parts of the globe will improve the operating margin of Corus and contribute more towards the bottomline of the combined entity. The new greenfield and brownfield projects in Orissa, Jharkhand and Chhatisgarh will add significantly to the topline.

Challenges: The higher inflation and pressure from the domestic government might force steel producers to reduce domestic steel prices, resulting in lower profit margins. The higher synergy from Corus will come through only if Tata Steel manages to integrate it successfully.


TCS

Competencies & Opportunities: TCS has been focussing on contracts with larger deal size and time span. This helps in increasing client engagement. Broadening of deliverables will also help in improving competence in the global market for IT services. TCS has opened delivery centres in low-cost destinations of Asia and Latin America. Such a multi-shore delivery strategy comes in handy in times of economic slowdown and lower IT spends by the clients. Presence in the domestic market is worthwhile in the scenario of a stronger home economy and depreciating dollar.

Challenges: Exposure to dollar denominated income increases risk of margin erosion given appreciating rupee. Slowdown in the US may impact the IT budgets of the US clients. This may retard the topline growth. Competition from MNCs in India will intensify. TCS has to come up with firm strategies for its domestic business.


TATA POWER

Competencies & Opportunities: Tata Power is India’s largest private sector power utility with installed capacity in excess of 2,300 mw. Over 600 mw new capacity is likely to be added during FY09, with another 8,000 mw capacity to be added over the next five years including a 4,000-mw UMPP at Mundra. TPL has acquired a 30% stake in two major Indonesian coal producers to assure future fuel requirements. It is emerging as an integrated player in India's power sector with investments in power generation, transmission, distribution and fuel supplies (coal mining and transport).

Challenges: Meeting the time and cost deadlines while executing the long gestation projects is a big challenge as the costs of equipment and project implementation services have gone up substantially. Even after the successful completion of its projects, TPL has to manage the regulatory environment well to ensure sufficient return on its investments.


INDIAN HOTELS

Competencies & Opportunities: Indian Hotels runs the largest domestic hotel chain with 71 hotels and an inventory of 10,487 rooms. It enjoys presence across wide range of hotels right from deluxe properties to budget. This puts the company in a bright spot and helps it take advantage of the growing tourism industry in India. Besides, the company has 14 properties overseas and is expanding its global footprint via acquisitions and greenfield ventures. This is likely to result in greater brand recognition abroad. Its recent entry into lucrative segment of business jets will help the company to take advantage of growing opportunities in this space.

Challenges: Its revenue is greatly dependent on India, where average room rates are expected to see a decline beyond FY09 when supply starts coming in. Rising real estate costs have greatly reduced the return on capital on new properties in major cities.


TATA TEA

Competencies & Opportunities: The company has taken initiatives to introduce different variants of tea. It has also forayed into bottled water and other beverages. This is likely to help it transform itself from a tea company to a beverages company. Acquisitions, geographic expansion and new products are the way to go for Tata Tea, which is already the second largest integrated tea company in the world. Its retail foray through ‘Chai Unchai’ beverage stores is likely to open a new route of growth for the company.

Challenges: Tata Tea operates in a labour-intensive tea industry, which has long gestation periods. This can be an imepdiment in improving operational efficiency. The company will have to grapple with the increase in raw material prices. The appreciation in the rupee is likely to drag profitability of the international businesses.


TATA COMMUNICATIONS

Competencies & Opportunities: Utilisation of existing infrastructure to deliver valueadded services is a sound proposition for Tata Communications. The company recently tied up with Telsima to provide WiMAX services in the country. It has also launched its global telepresence network service to offer virtual meeting solutions. These initiatives will fuel future revenue growth. Tata Comm’s strategy to build global tie-ups for high-end technologies will help it keep pace with the fast-changing technology scenario and improve its global presence.

Challenges: Tata Comm needs to increase focus on deploying managed services, given the stiff competition in domestic as well as global enterprise data space from bigger telecom operators. The company has to improve operational processes in order to increase customer base for its broadband and other services rapidly.


TATA CHEMICALS

Competencies & Opportunities: The recent acquisition of US-based General Chemicals has consolidated position of Tata Chemicals (TCL) in the global soda ash market. Post-acquisition, TCL has become the second largest soda ash manufacturer in the world with majority of the production coming from cheaper natural sources. This goes well with its overall global strategy. TCL is already on an expansion spree for its inorganic chemicals and fertilisers plants in India. This will help it to strengthen its domestic presence. TCL is setting up a 30,000-litres-per-day ethanol plant and has ventured into wholesaling of fresh agricultural produce. This diversification would help in mitigating risk from slowdown in the core business.

Challenges: TCL has to see through an effective integration strategy of its soda ash business with the overseas acquisition. Managing overall growth of the company will be a tough task given the diversification into new business domains.


VOLTAS

Competencies & Opportunities: Voltas is a market leader in central air-conditioning and climate control business in India, besides being a major player in booming West Asia. It is also India's leading distributor and re-seller of textile and mining equipment. Recently it went through a corporate restructuring which has transformed it into a leaner and competitive player. The demand for central A/Cs and climate control systems is booming, thanks to rapid growth in retail, real estate and hospitality sectors. It has also got a boost from strong capex in textile, mining and retail sectors where it supplies forklifts.

Challenges: Being a capital goods supplier, it's highly prone to an economic downturn. It faces strong competitors across its product portfolio. The consumer air-conditioner business continues to be a drag on the company's profitability.


TATA TELE (MAHA)

Competencies & Opportunities: The company is aggressively expanding its base in smaller circles. Increasing presence in high-growth telecom circles B and C will help the company grow its subscriber base rapidly from existing five million.

Challenges: Higher competition is likely to put further pressure on the company’s average revenue per user. This necessitates more focus on value-added services. The company currently provides mobile services on CDMA platform. Establishing a GSM footprint would be a challenging task given competition from bigger GSM players. The company needs to expand its operations in the field of managed services to stay competitive. The company lacks brand recognition. It has to establish its brand presence in the highly competitive
markets.


TITAN IND

Competencies & Opportunities: Titan has diversified into a wide consumer-centric product portfolio comprising time pieces, jewellery, eye wear, and precision equipment among others. A good pedigree, reputed brand standing and strong distribution and service network offer good prospects for the company to ride the boom in consumption. Expansion of retail stores, specially in tier II cities, will help the company increase profitability.

Challenges: Record high gold prices can lead to a drop in jewellery demand, restricting the company's growth in the business. International foray may not be very profitable in view of the global economic slowdown. Branded retail segment is fraught with intense competition. Dominance of unorganised players in the lower end of the watch market poses a challenge. Given rising incomes, Titan may have to face competition from international brands in the premium watch category.


TRENT

Competencies & Opportunities: After establishing its foothold in retail space through Westside stores, Trent is taking new initiatives of foraying into the premium segment. Recently, it joined forces with the Benetton Group for the expansion of the Sisley brand in India. It is tying up with designers to mark its presence in a range different from the private labels. This will help the company face stiff competition in the domestic retail space. Trent has reported good growth in the past few years. Revenues have grown consistently (CAGR of 55% from FY04-07). A sustained revenue model is necessary as it facilitates future expansion plans.

Challenges: The roll out of new stores has not been aggressive. The company has added only 19 stores from ’03 till date. Faces competition from aggressive players such as Pantaloon and new entrants including Reliance Retail.

ArcelorMittal to invest $25 bn in India

ArcelorMittal, the world's largest steel maker, is planning to invest nearly $25 billion in the country, according to a top company official. "India is one of the star performers and we are very bullish about it. We are committed to invest nearly $25 billion," Malay Mukherjee, member of the group management board of the company said.

Other investments by the company in India
Besides investing $10 billion each in Orissa and Jharkhand on 12 million tonnes steel project each, the company proposes to have more customer-oriented projects such as service centres in the country. "We are also working in joint venture in Chennai in stainless steel, for the automotive sector," Mukherjee said. ArcelorMittal is putting up two steel plants of 12 million tonnes capacity each in Orissa and Jharkhand at a total cost of $20 billion.

Brain drain is passe, India a hot destination for CEOs

Excerpts sourced from Rediff.com

The Indian office of a leading multinational mobile phone company is facing an unusual challenge. It is losing top executives who have declined senior-level assignments abroad because they do not want to miss opportunities in India.

The brain drain, it seems, is passe. India is becoming one of the hottest destinations for expatriates (both those of Indian origin and foreigners) for top jobs. That is because big business houses in India are ready to offer pay packets that are equivalent to and sometimes more than global benchmarks.

This is a key finding of a study of senior recruitment trends by US-based SpencerStuart, a leading executive search firm that specialises in recruiting CEOs, presidents and COOs for companies globally.

SpencerStuart, which has operations in India and recruits CEOs for almost half the Fortune 500 companies, said for key sectors like retail, real estate, power, oil and gas and refining, transportation and logistics, Indian business houses are offering annual salary packages ranging from $750,000 to $1.5 million - excluding stock options.

Nearly half the CEOs and COOs recruited in these sectors are foreigners (including non-resident Indians).

CEO salaries in these sectors are nearly double what companies pay in other sectors, which could range from $350,000 to $750,000.

"Expats are increasingly finding India a more exciting market in which to work than mature markets. And large Indian companies in certain sectors are willing to match if not better global salaries to get talent which is difficult to get in India," said Anjali Bansal, managing director of SpencerStuart.

In fact, she added, multinationals are finding it difficult to woo Indians at the senior level to take up foreign postings abroad.

As a strategy, SpencerStuart has advised clients to shift regional headquarters from, say, Singapore or Hong Kong to India so that senior Indian executives can operate as heads from India. Several companies are considering this option.

SpencerStuart also said certain countries have been identified for CEO recruitment for India. Contrary to common belief the US is not the favoured recruitment ground.

In real estate the happy hunting grounds include Australia, south east Asia and the UK, amongst others. For oil and gas and power they are Kazakhstan, the North Sea area, Canada and West Asia. For retail the hottest recruitment grounds are West Asia, south east Asia (especially Hong Kong) and Europe.

Bansal said that the recruitment ground is essentially from countries that have seen similar development as India.

India a 'fraud haven,' says report

Terming the country as a 'fraud haven' with about 60 per cent of the firms having detected frauds in past two years, global consultancy major KPMG on Tuesday said that India Inc is still unprepared to handle this menace.

Making the situation even worse, at least 5 per cent companies have had losses exceeding Rs 10 crore (Rs 100 million) and more than double of them have estimated the hit on their bottom lines in the range of Rs 1 crore (Rs 10 million) to Rs 10 crore, KPMG said citing its 'India Fraud Survey Report 2008.'

According to the survey, over 70 per cent of companies believe that fraud in India would further increase in next two years, while over 80 per cent respondents recognised fraud as a problem in the corporate environment in the country.

Indicating about 54 per cent rise in the number of fraud occurrences since the previous survey in 2006, about 60 per cent of respondents confirmed having experienced fraud at their companies, as against just 39 per cent two years ago.

While noting that actual cost of fraud to business was difficult to estimate as not all are discovered, KPMG said that 31 per cent of those surveyed suffered losses of Rs 10 lakh (Rs 1 million) to Rs 1 crore, while 11 per cent put the losses at Rs 1-10 crore and another 5 per cent at more than Rs 10 crore. However, it was less than Rs 10 lakh for about 53 per cent.

The financial services sector has retained its position as the most susceptible to frauds, while real estate and infrastructure surpassed IT and ITeS as the second most risky business in this regard, the survey found.

The report further pointed out that threat of fraud comes mostly from within the organisation. Majority of those surveyed felt that 'employees pose the maximum threat to an organisation and the senior management is more likely to commit fraud as compared to other employees.'

According to other findings of the survey, over 75 per cent of companies believe that fraud remaining undetected is their biggest concern, followed by inadequacy of anti-fraud measures and unethical behaviour of their employees.

KPMG said that the dual impact of two concerns, unethical behaviour of employees and inadequacy of anti-fraud measures, leads to an environment where both inclination and opportunity co-exist. 'This could mean that organisations in India that remain passive in their approach to deal with fraud may be a perfect breeding ground for fraud,' it added.

KPMG said that over 80 per cent of respondents believed that corporate sector pay bribes or make facilitation payments to do business in India. However, 60 per cent did not have adequate knowledge about anti-corruption laws.

Among the respondents, close to 25 per cent were at the level of an executive director, managing director or chief executive officer, while 30 per cent were chief financial officers of companies.

The inherent responsibilities and trust associated with senior positions, ability to over-ride internal controls, internal knowledge and access to confidential information increases the risks, it noted.

After employees, the maximum threat is perceived from suppliers and service providers, KPMG said.

'With the increase in the number of business transactions combined with the lack of effective monitoring, frauds are a real time threat for most corporates in India. It comes as a surprise that even the larger companies operating in India do not have adequate risk management strategies,' KPMG India's Forensic Services head Deepankar Sanwalka said.

Forecasts for the economy & markets in 2008

Author: Abheek Barua, Chief Economist, HDFC Bank
Source: Rediff

Since this is my last piece this year I thought I would write about the forecasts I have made for the global economy and financial markets for 2008. There is an important caveat, of course. The global macroeconomic and financial environment remains terribly volatile and a number of these predictions could go wrong.
Let me get to the forecasts. The jury appears to be still out on whether the US is headed for a recession next year (going by the textbook, a situation in which GDP growth turns negative for two successive quarters) or whether swift action by the US Federal Reserve is likely to prevent such a situation. US consumption data like retail numbers occasionally surprise positively and US inflation is far from dead. However, despite this bit of fuzziness I remain somewhat sanguine about the following trends.

Whether it qualifies technically as recession or not, the US is likely to see a marked slowdown at least in the first half of 2008, which could last well into the second half of the year. Besides, despite central banks' best efforts, it will take a while for American and European banks to resume lending to each other and to even slightly risky borrowers. Thus, I see the credit squeeze in the US and Europe continuing and perhaps even getting worse in the near term.

The US slowdown is likely to have knock-on effects on the global economy and world GDP growth is likely to moderate. More specifically the result of sharp currency appreciation, harder interest rates and a credit squeeze will begin to take a toll on euro-zone growth. The UK is well into a cyclical downturn.

As I have argued in earlier columns, I think it is impossible for Asian economies to remain immune to a downturn in the developed economies and growth rates will soften in this region as well. I honestly don't know much about Latin America but I think it is sensible to assume that what applies to Asia applies to these economies as well.

Global energy and food prices are likely to remain elevated in the first quarter but are likely to dip subsequently as demand compression on the back of slowing world demand begins to reflect in prices. I am, for example, convinced that concerns about fresh oil supplies and oil peaks notwithstanding, slower global growth is fundamentally incompatible with oil prices at over ninety dollars a barrel.

The same logic might just apply to other assets including stocks. If indeed the signs of global slowdown become more acute, large investors might begin to dump equities and hold on to safer assets like treasury bonds. If there is growing aversion to equities as an asset class, Asian markets (including Indian stock markets) will also take a hit. The slide in stock prices will not be due to risk-aversion alone.

If global growth slows, the slowing down will begin to impact the top line and bottom line growth of companies across economies. That in turn will buttress the negative sentiment towards risky assets. The bottom line: be prepared for a "correction" in the Indian stock market next year.

There is a potential offset. The US Fed is likely to follow a policy of phased quarter percentage point cuts in its target interest rate - I expect the American central bank to cut the Fed funds rate thrice next year. Thus while inflation risks will weigh on the Fed's mind, I expect growth concerns to dominate and spur the Fed to cut rates some more. I expect the European Central Bank to hold interest rates until the second half and then start cutting signal rates.

My bank's research team has forecast two rate cuts next year, possibly in the second half. The Bank of England is likely to be swifter with two quarter percentage point cuts in the first half of 2008. We also expect more direct liquidity both through unilateral cash infusion by central banks and perhaps through more co-ordinated intervention.

The question is: what happens to all this liquidity when central banks turn on their cash spigots? If investors remain terribly risk-averse, a lot of it would go into low-risk government bonds.

US treasury bond prices will continue to move up and yields will decline as this process continues. Besides, if US assets keep getting cheaper and cheaper, investors will sniff a bargain and start buying these assets. In fact, some of the bigger funds have already started picking up chunks of the American financial industry where valuations have hit rock-bottom. Asian sovereign investment funds, for instance, are bailing out cash-strapped American banks, picking up significant equity stakes in the process.

Finally, there is also a chance that some of the money will start finding its way into emerging financial markets where growth rates, at least in relative terms, will remain high in comparison with the rest of the world. What happens then? My prediction is that emerging markets including India are likely to get buffeted by the crosswinds of rising global liquidity and cheaper interest rates, on one side, and concerns about slowing growth, on the other. This means two things.

Our stock markets will remain volatile for a while to come and sharp upswings could be followed by a quick downturn. Ditto for the currency markets. The interplay of these opposing forces also means that these markets will be stuck in a range. Thus I do not see the possibility of prolonged phases of decline, nor do I see the prospect of an untrammelled bull run.

What will take the markets out of the doldrums? Since the problems of the US economy lie at the heart of all the problems, it will take some clarity on the situation there to do this. Any strong signal that the US cycle has bottomed out will lead to a quick re-pricing of risk and realignment of asset prices.

Car Models in India

Listed below are some of the major automotive brands and their models on Indian roads:

Latest Cars
Chevrolet Spark | Fiat Grande Punto | Mahindra Ingenio | Mahindra Renault Logan | Maruti Suzuki SX4 | Mitsubishi iCar | Skoda Fabia | Toyota Lexus LS 460

Hyundai Motors India
Hyundai Elantra | Hyundai Accent | Hyundai Getz | Hyundai Santro Xing |
Hyundai Sonata Embera | Hyundai Terracan | Hyundai Tucson | Hyundai Verna

Maruti Udyog
Maruti 800 | Maruti Alto | Maruti Baleno | Maruti Esteem |
Maruti Grand Vitara XL-7 | Maruti Gypsy | Maruti Omni | Maruti Swift | Maruti Suzuki SX4 | Maruti Versa | Maruti Wagon R | Maruti Zen | Zen Estilo

Sports Cars
Ferrari 248 F1 Racing Car | Ferrari F1-2000 | Ferrari F2001 Racing Car | McLaren F1 Racing Car | McLaren SLR 722 Sports Car

Bentley Motors Limited
Bentley Arnage | Bentley Azure | Bentley Brooklands | Bentley Continental Flying Spur | Bentley Continental GT

Lamborghini India
Lamborghini Gallardo | Lamborghini Gallardo Spyder | Lamborghini Murcielago LP640

Mercedes
Mercedes Benz C-Class | Mercedes-Benz CLS | Mercedes Benz E-Class | Mercedes Benz SLK-Class | Mercedes-Benz SL-500

Ford Motors
Ford Endeavour | Ford Fiesta | Ford Fusion | Ford Ikon | Ford Mondeo

Fiat India
Fiat 1.6 Sport Adventure | Fiat Grande Punto | Fiat Palio | Fiat Petra

Honda India
Honda Accord | Honda City ZX | Honda CR-V | Honda Civic

Hindustan Motors
Ambassador Car | Mitsubishi iCar | Mitsubishi Lancer | Lancer Cedia | Mitsubishi Pajero

General Motors
Chevrolet Aveo | Chevrolet Aveo U-VA | Chevrolet Forester | Chevrolet Optra | Chevrolet Spark | Chevy SRV | Chevrolet Tavera | Opel Corsa | Opel Corsa Sail

Skoda Auto
Skoda Fabia | SkodaLaura | Skoda Laurin & Klement | SkodaOctavia | SkodaOctavia Combi | SkodaSuperb

Porsche
Porsche Boxster | Porsche Carrera GT | Porsche Cayenne

Tata Motors
Tata Indica | Indica V2 Xeta | Tata Indigo | Tata Indigo Marina | Tata Indigo SX | Tata Safari | Tata Sumo Victa

Toyota Motors
Toyota Camry | Toyota Corolla | Toyota Innova | Land Cruiser Prado | Toyota Lexus LS 460

Reva

Mahindra & Mahindra
Mahindra Bolero | Mahindra Scorpio | Mahindra Ingenio | Mahindra Renault Logan

BMW
BMW 530i | BMW 760Li

Audi
Audi A4 | Audi A6 | Audi A8 | Audi Q7

Nissan Motors
Nissan X-Trail

Rolls-Royce Motor Cars
Rolls-Royce Phantom